Selecting
a
Selecting a
media agency
INTRODUCTION
Whatever their size and experience, advertisers strive for quality, performance and productivity in all disciplines; and media strategy/media buying are no exception.
In any discipline, questioning its process may occur at certain times in the lifecycle of an organi-sation, and this may lead to a media pitch.
Over the past years, media planning and buying have come through many changes. Communi-cation groups have turned their media departments into specialised companies and independent media buying shops have strengthened their skills and strategic capabilities. The companies are no longer mere buying points but real media agencies: their competencies have broadened to better meet advertisers’ needs.
Today, advertisers face a highly concentrated and sophisticated media agency market, whose players have a high degree of professionalism. Selecting a business partner in this area is there-fore a critical step for both the advertiser and the agency, and from both a strategic and fi nancial perspective.
In this context, this guide aims at helping advertisers and agencies to work together in an infor-med manner, focusing on quality and performance in their relationships. We propose methods, from defi ning the objectives to fi ne-tuning the contractual arrangements, which will allow the advertiser and its media agency to build a new relationship on solid grounds.
Rather than identifying the “best” media agency, the advertiser should seek to fi nd the one which will best understand its needs and bring appropriate answers to its questions. From the following pages, the advertiser will be able to select from all the criteria listed those which are of key priority to its own company.
Special thanks to UDA (advertisers association inFrance) and UDECAM (media agencies asso-ciation in France) for the fi rst edition of this guide (“Bien choisir son agence media” published in France in 2000).
Selecting a
media agency
CONTENTS
INTRODUCTION 2 CONTENTS 3 EXECUTIVE SUMMARY 51 THE ROLE OF THE MEDIA AGENCY 7
1.1 Developing strategic advice 7
1.2 Analysing and selecting communication vehicles:
tactical media planning and optimisation 8
1.3 Leveraging the purchasing power of the advertiser:
negotiating and buying 8
1.4 Presenting a detailed post-analysis 8
1.5 Training and sharing information 8
1.6 Contributing to the consistency and effective functioning
of the media marketplace 8
2 SELECTING A MEDIA AGENCY 9
2.1 Asking media agencies to pitch 9
2.1.1 The internal review 9
2.1.2 Selecting a shortlist 9
2.2 The pitch process 10
2.3 Best practice in managing a media pitch 11
2.3.1 Defi ne the objectives of the pitch 11
2.3.2 General principles of the pitch 11
2.3.3 Preliminary briefi ng on the intended client/agency
working relationship 12
2.3.4 Timings in preparing for the pitch 12
2.3.5 Pitch fee 13
2.3.6 Confi dentiality on the running of the pitch 13 2.3.7 Confi dentiality on information exchanged 13 2.3.8 Intellectual property of proposals
made by losing agencies 14
2.3.9 Presentation of the brief 14
2.3.10 Conditions of the media agencies’ presentations
of proposals and contact between teams 14 2.3.11 Internal examination of the proposals 15
Selecting a
media agency
3 THE BRIEF AND SELECTION CRITERIA 16
3.1 A brief in three parts 16
3.1.1 The advertiser 16
3.1.2 The pitch in context 17
3.1.3 Questions 17
3.2 Selection criteria 18
3.2.1 Media agencies 18
3.2.2 The media debate 20
4 UNDERSTANDING THE FINANCIAL PROPOSALS 22
4.1 In terms of negotiations 22
4.2 In terms of remuneration 23
APPENDIX 25
APPENDIX 1 – Different budget defi nitions 25
Selecting a
media agency
EXECUTIVE SUMMARY
The key principles and main steps in selecting a media agency can be summarized as follows.
1 Internal
review
Before making the decision to launch a pitch, it is useful to begin with a complete internal review of the current media process:
• the needs of the company, both existing and anticipated • the decision matrices (who, what, when)
• the level of performance of current media plans versus objectives
• the relevance of the objectives assigned to the agency to the company’s internal objectives. On completion of this review, if the decision to proceed with a pitch is made, a shortlist of media agencies will be drawn up. It is recommended to shortlist no more than four companies including the incumbent if they are repitching. It will comprise companies which, according to their size and structure, are judged likely to be best able to answer the specifi c needs which have been identifi ed. If deemed necessary, the advertiser can ask for the WFAs, their national advertiser association, or an outside specialised consulting company’s help from this point.
2
Well thought-through brief
This is the cornerstone of the pitch procedure. It will be the sole basis for the candidates to work with. The answers that they bring to the questions raised by the brief should show a complete un-derstanding of the situation and thus provide an assurance of a productive future collaboration. The brief should comprise three components:
• The presentation of the advertiser: the company, the products, the markets/categories, the customers, the communication.
• The context of the pitch: analysis of the current situation, objective of the pitch, detailed procedure of the pitch.
• The selection criteria: they can vary according to the advertiser’s objectives and will be linked to:
– the media agency: structure, size, corporate environment, image, organisation, scope of service, remuneration policy.
– the media issues: strategic criteria (relevance, innovation and practicality of the propo-sals, justifi cations, planning and buying philosophy and methods), fi nancial criteria (ne-gotiation policy, ability to consolidate buying, remuneration), technical criteria (planning and buying process and tools) and personal criteria (the team proposed).
Selecting a
media agency
3
Some key principles for an effective pitch process
• Transparent rules: precise and identically applying to all candidate agencies.
• Clear objectives: as judging cannot occur simultaneously across all criteria, it is essential to identify those which will be prioritised in the fi nal choice. A scoring matrix can often be a useful tool.
• Preliminary dialogue about future collaboration: at the beginning of the pitch process, it is recommended that the advertiser and the agency exchange information (contracts, proce-dures, etc.) about their preferred working relationships.
• Four weeks preparation time for the agencies: also build into the overall schedule suffi cient time for the advertiser’s own internal decision making.
• Utmost confi dentiality of all information provided by the advertiser and the agencies: some-times, this will be confi rmed in a formal agreement between all parties.
• Equal fairness for all candidate agencies: information from the advertiser to the agencies should be presented in identical conditions.
• Quick communication of the decision taken: this should be done in a straightforward manner (a scoring matrix may be helpful). Rather than selecting the “best” media agency, a thorough preliminary analysis, a well thought-through brief and a clear and professional selection pro-cedure will allow the advertiser to identify the media agency which will best meet its needs.
Selecting a
media agency
1 THE ROLE OF THE MEDIA AGENCY
Before proceeding with selecting a media agency, it is useful to be aware of what services media agencies offer in today’s market.
Over the past years, many factors have infl uenced the development of the role of media agen-cies:
• The explosion of media outlets, linked with the dynamism of media groups and a revolution in technology (digital TV, multimedia/internet, interactivity), means a more complex media choice, especially since this proliferation has led to audience fragmentation.
• The advertisers’ search for ever more effectiveness and productivity from their media monies has increased the need for research and tools enabling an accurate evaluation of audiences, rate cards, selling conditions and measurement of return on media investments.
• The increasing market concentration of media, on an international scale, has in turn driven the development of media agencies in size, staffi ng, technology and international capability, with a view to better serving the advertiser’s interests.
The different services media agencies offer are summarised here in six sections.
Even if the advertiser does not have a need for all these services, a better understanding of the whole spectrum will enable the advertiser to better select those which are to be handled by the media agency.
1.1 Developing strategic advice
• Over and above strategic media advice, advice may be given as necessary on these specifi c areas:
– products, brands and brand portfolios: in terms of brand image, targeting, media usage and phasing,
– category and category segments: identifying and analysing media usage by the compe-tition, detecting niches and opportunities,
– targets: translating marketing targets into communication and media targets, quantifi -cation and defi nition of targets, target group attitude towards media and product pur-chase, control of side-effects (on a brand and product basis),
– effectiveness: contribution of the communication plan to the effectiveness of the mar-keting mix, links between the media plan and the overall communication effectiveness. • Media strategy/planning:
– defi nition of targets and objectives: from marketing, sales and communication objecti-ves, with media surveys and consumer databases,
– investment analysis: evaluation of previous investments, optimum budget defi nition to achieve objectives, budgetary choices,
– recommended media mix: media selection, phasing over time, weight of secondary communication channels (DM, partnerships, barter, etc.),
Selecting a
media agency
1.2 Analysing and selecting communication vehicles: tactical media planning
and optimisation
• Quantifying and prioritising objectives: reach and frequency distribution levels, optimium contacts, required environment, qualitative aspects, special positions.
• Determining estimated net costs of contacts.
• Developing plans (with alternatives) and producing a justifi ed recommendation. • Optimising fi nal plan according to constraints and opportunities within each medium.
1.3 Leveraging the purchasing power of the advertiser: negotiating and buying
• Analysing terms and conditions of each media vehicle.• Ranking vehicles according to net cost and costing of each plan. • Negotiation strategy for each vehicle.
• Proof of insertion and invoicing.
• Administrative and fi nancial follow-up: permitting the advertiser to monitor media purchases and budget status with simple direct access (extranets, EDI, etc.).
1.4 Presenting a detailed post-analysis
• Media post-analysis: actual versus objectives (either versus competitive or rate card), qualita-tive and quantitaqualita-tive, explanation of discrepancies.
• Buying post-analysis: negotiations and other economic benefi ts obtained, proof of insertion, check versus orders, compensations and make-goods.
• Effi ciency post-analysis: role of media in the marketing mix, analysis of effects related to causes.
1.5 Training and sharing information
• Designing and conducting training seminars on media strategy, on media-related issues and on specifi c markets’ issues.
• Designing and circulating regular media information (paper and/or electronic). • Initiating and investing in proprietary ad-hoc research.
• Permanent monitoring of developments in the media world (nationally and internationally).
1.6 Contributing to the consistency and effective functioning of the media marketplace
Contributing to the consistency and effective functioning of the media marketplace, including control, together with advertisers and media owners, of media research to guarantee its accu-racy and usability. It should also include the amplifi cation of their clients’ perspectives of other relevant industry issues through all appropriate channels such as national and international as-sociations.Selecting a
media agency
2
SELECTING A MEDIA AGENCY
2.1 Asking media agencies to pitch
2.1.1 The internal review
For an advertiser, the decision to invite a pitch in the media and more specifi cally media buying area, can be made for several reasons, for example:
• Internal procedural systems which call for periodic competitive review of each of its partners/ suppliers.
• Modifi cation in the structure of the company (mergers, buy-outs, etc.) and therefore its needs, especially regarding media arrangements.
• Wanting to test the negotiation, innovative and creative capacity of its current partner/sup-plier.
• Unsatisfactory relationship with the incumbent media agency.
Whatever the motivation for the advertiser to put his business to pitch, proceeding with a com-plete analysis of its current media arrangements, taking into account of its own needs and its dealing with the incumbent agency, is in the main the best way to start in putting together a brief for the pitch.
In certain cases, it is even possible, thanks to this analysis, that the media service can be improved upon without having to resort to a pitch situation.
The analysis could answer, for example, the following questions:
• Are working procedures clearly identifi ed between the advertiser and its media agency? • Is the advertiser’s team in phase with its actual needs?
• Does the media agency listen to the advertiser, react and is well organised on a daily basis? • Has the advertiser new needs (e.g. new products needing a media launch, signifi cant
reduc-tions or increases in budget) or a new structure (e.g. bought by an international holding com-pany with new reporting structures) which will require a review of working arrangements, objectives and remuneration?
2.1.2 Selecting a shortlist
If, after the analysis, the principles of a pitch have been agreed upon, the needs of the advertiser have to be confi rmed, especially in terms of size of budget, structure and objectives (e.g. predo-minantly strategy or media buying, or both?).
A fi rst list of media agencies, put together and cross-checked against the advertiser’s own knowledge of the market, or available documentation, can be enough to produce the shortlist.
Selecting a
media agency
2.2 The pitch process
Choosing a media agency consists, more often than not, in a process of elimination, at successive steps of the pitch, as shown below, until a fi nal choice emerges at the end.
As each advertiser is different, it will need to focus on the stages that are relevant to it in arriving at its optimum choice of agency.
Typical fl ow chart for a media agency pitch.
Advertiser’s internal review
Definition of criteria for selection Information on the media agency market Establish first draft list of media agencies
Draw up shortlist of candidate agencies – more formal interviews
PITCH PHASE
Draw up brief with precise objectives Presentation of brief
Discussion rounds
Receive candidates & presentation of proposals Rating of proposals on a scoring matrix
FINAL CHOICE
Advice from selection consultants and independent media auditors
Interviews – informal Interviews – informal Trade associations
Directories
Agencies develop proposals ± 4 weeks
Selecting a
media agency
2.3 Best practice in managing a media pitch
2.3.1 Defi ne the objectives of the pitch
The diversity of advertisers, their problems and the fi nancial implications that these problems involve, requires advertisers to express clearly at the time of a pitch for a new media agency the exact nature of the questions posed and the level of detail desired in the review.
This requirement should inform the content of the brief which the advertiser will have prepared for this purpose. Needless to say (see chapter 3) this document should be tailor-made to meet the advertiser’s specifi c demands.
It is clearly pointless to request a pitch on all the advertiser’s service requirements if there is no intention of giving all these services to the winning media agency. It is obvious that, taking into account the time that a pitch takes, both parties should feel the process to be as relevant as the end result.
For example, the objective of the pitch could be based on:
• A proposal for the media strategy adopted from the communication strategy of the adverti-ser (if, of course, this is already known and fi nalised).
• A fully-costed media plan.
• A critical analysis of the media plans already used by the advertiser in the recent past. Or even:
• A critical analysis of media policies of the competition.
• A critical analysis of the current media plans made for a client of the media agency, etc. If we insist on a wide range of criteria on which the pitch is to be judged, it is because it is im-portant that the advertiser, as well as the media agency, should recognise that the price is not the only criterion of choice and that other factors, notably qualitative, should at this stage take precedence over purely fi nancial factors.
2.3.2 General principles of the pitch
All pitches should be based on the rule of transparency and should be precise and identical for all the media agencies involved.
It should be based on a written brief along with a timetable, which details to each agency the total sum of necessary information for its participation. The pitch should follow a formal and fair process.
Selecting a
media agency
2.3.3 Preliminary briefi ng on the intended client/agency working relationship Certain issues, which may not appear fundamental during the pitch, can become so once the working relationship begins. It is therefore essential to talk about them before the pitch starts in order to avoid misunderstandings and time-wasting.
It may concern the following:
• The philosophy of each party in the agency-advertiser relationship. • The contract that one of other wishes to see implemented.
• The legal and shared ownership links that can exist between the media agency, media owners, communication agencies, etc. and the complications which then may be created.
• The potential problems in case of confl icting clients and the solutions proposed (bearing in mind that often there are more brands in one category than media agencies).
• The main principles of remuneration.
• The organisation proposed (number of staff/length of service in the industry/ quality/descrip-tion of the posiquality/descrip-tions that each member will have when working on the business).
2.3.4 Timings in preparing for the pitch
Bearing in mind the importance of the investments at risk, reasonable time should be allowed to the competitors to prepare high quality proposals which do justice to the brief.
Realistic timetable for a pitch:
Preparation for the pitch 4 weeks
Including
Diagnostic/internal review
Discussion with all current partners Development of new objectives Overview of media agency market Defi nition of brief for agencies
Pitch 13 weeks
Including
Presentation of brief to agencies 1 week
Development of proposals by agencies 6 weeks
(remember to offset for public holidays like Christmas in some markets)
Presentation of proposal 1 week
Internal examination of proposals
and decision 3 weeks
Selecting a
media agency
Aim to begin the working relationship at the end of 3 months minimum.
The length of time being more of less 4 months, the advertiser should fi x the ideal period of the pitch, taking into account:
• Notice period of the existing contract. • Dates for defi ning marketing strategies. • Budget approval dates.
• Timing for putting together media teams (in case of large accounts). • Length of time needed to buy space (TV/outdoor).
• Etc.
2.3.5 Pitch fee
There is no standard pitch fee for media agencies. However, it should be born in mind that when the advertiser’s request involves a high level of work, it is good practice to remunerate the losing agencies.
The level of compensation, when this has been decided, should be stated before the pitch, based on a fee and should be identical for everyone.
This compensation guarantees a serious commitment to the pitch by the media agencies invol-ved.
2.3.6 Confi dentiality on the running of the pitch
Advertisers are sometimes inclined to preserve the utmost confi dentiality regarding their work. Competing media agencies will therefore respect the wishes of the advertiser; the main point is to agree before-hand.
2.3.7 Confi dentiality on information exchanged
The pitch consultation implied, more often than not, that the advertiser gives the agency confi -dential information concerning its commercial, marketing, communication, etc., policies. In the same way, the media agency gives the advertiser confi dential elements on its organisation, its negotiating approach, its results, etc.
This is why the partners should be willing to respect this confi dentiality strictly. This involves, in particular:
• That the agency and its staff do not pass on to other clients any information received from the advertiser and do not use this information to pitch competitive clients.
• That the advertiser does not communicate the information received from a media agency to other competitors or other partners.
Selecting a
media agency
Certain advertisers expect the signature of a mutual contract to preserve the interests of both parties. Such agreements should also bind all personnel to retain confi dentiality even if they mi-grate to other organisations – this may have to be effected through advertisers’ and agencies’ employment contracts.
2.3.8 Intellectual property of proposals made by losing agencies
The documents and proposals presented during a pitch remain the property of the losing media agencies, unless it has been agreed otherwise under the terms of a specifi c contract.
It is also agreed that the advertiser should not employ the recommendations made by a losing media agency; equally a losing agency should not present the same media recommendations and/or proposals to a confl icting client prospect.
2.3.9 Presentation of the brief
It is recommended that the brief is sent before the oral presentation in order to allow the agen-cies time to refl ect upon and prepare questions.
The advertiser should organise a meeting to present and orally comment on the brief. One mee-ting per agency is the only way to engage each company in a constructive dialogue.
The brief/meeting will also detail which people the agency can contact at the advertiser’s offi ce during the preparation of their proposal, for extra information.
Extra information, judged to be of use by the advertiser, should be communicated to all participa-ting agencies. The advertiser is not obliged to circulate any further information requested by one of the pitching agencies unless they consider that its exclusion from the original briefi ng material was an oversight and that it should be circulated to all parties.
2.3.10 Conditions of the media agencies’ presentations of proposals and contact between teams
The shortlisted agencies must be allowed to present their proposals in the best neutral and objec-tive conditions possible.
Ideally, it is desirable that all the agencies are seen in succession, if possible on the same day, so as to better appreciate and compare the approaches of each one. In all cases, the same staff must represent the advertiser at all the agency meetings.
The presentation order can be decided at random. It can also start with the incumbent, as they are a known quantity and can therefore set the benchmark for other, new, parties to meet or
Selecting a
media agency
The length of time set aside for the meeting should be decided upon in advance, and should, of course, be the same for each agency and should be of a duration relevant to the complexity of the brief and expected response.
Whenever possible, the agencies should be allowed to present on their premises – their ‘home turf’.
Whilst it is desirable to hold all pitches as close to each other as possible, it is strongly advisable to allow adequate time for travel between them so that they start on time, are allowed to continue for their agreed duration and perhaps overrun slightly to enable detailed cross-examination if required. Dedicated transport is often a good solution to this, as it also enables rapid views to be shared in transit.
The advertiser should have opposite them the team that, should the agency win, will be wor-king for them. (NB. In the case of big budgets, the agency will not necessarily have a complete team.)
The media agencies should either leave before or after the oral presentation a written document, the principal purpose of which should be to answer the questions in the advertiser’s original brief. This document should be as concise as possible. It is recommended that the quality of the res-ponse is not necessarily measured by the number of size of documents supplied!
The advertisers may judge it necessary to visit the media agencies’ offi ces and, if required, be given a demonstration of the agencies’ software programmes.
2.3.11 Internal examination of the proposals
The advertiser’s staff should put aside enough time to evaluate each proposal.
In order to be objective, a scoring matrix may be employed to mark the proposals and the teams. It is preferable that the decision is made quickly. The advertiser should notify the agencies of the date by which it will reach its decision.
The advertiser can be helped by an independent media auditor. The choice of auditor is an im-portant decision: their competence, reliability and objectivity should be carefully vetted. Please refer to the separate WFA/EACA and ISBA/ IPA agreed guidelines in this specifi c area.
2.3.12 Communication of the fi nal decision
When the decision has been made, the advertiser should inform all the media agencies simulta-neously, both for simple courtesy and for best public affairs management purposes.
The advertiser should explain to the losing agencies the reasons why they have not been appoin-ted.
Selecting a
media agency
3 THE BRIEF AND SELECTION CRITERIA
To run a pitch well, good tools are a necessity.3.1 A brief in three parts
In order to establish a real partnership, the brief must defi ne not only the precise objective of the collaboration, but it is also the opportunity for the client to present itself to a potential partner. Detailed here is the type of brief that an advertiser can submit to agencies that it approaches. It goes without saying that this is not prescriptive, and is not designed to be exhaustive. The brief must be suffi ciently theoretical, yet clear, but also truthful, in order to allow the parties to clearly defi ne the parameters of any eventual collaboration. It will need to be adapted according to the specifi c nature of the problem.
It will consist of three parts:
• The fi rst centres around the client itself. • The second is linked to the context of the pitch.
• The third comprises questions posed to the media agencies.
The advertiser will be able to defi ne the structure that the response to the brief should take, which will permit him to best compare each response.
3.1.1 The advertiser
In order to present itself to potential partners, the advertiser may give information under the following three headings:
Presentation of the business
• Background.
• Business structure/shareholding.
• Annual report/company profi le if there is one. • Business objective/mission statement. • Product policy.
• Status of R&D.
• Organisational structure and organigram/hierarchy. • Agency contacts (by function/discipline).
• Short and long term business plans.
Selecting a
media agency
Activity/brands and products
• Presentation of the main activity/brands, of the products and services of the business. • Clients/current or potential prospects.
• Competitive environment for each of the markets in which it is active. • Product and brand image.
• Market perspectives in the short and medium terms. • Distribution network.
• Socio-political context (legislation, consumer expectations, etc.).
Advertising and communication
• Structure of the advertising/communications agency – decision-makers.
• Key defi ned communications objectives (image, frequency of message, general recogni-tion).
• The different services of the agency in the advertising/communications domain and their precise objectives.
• Latest creative work.
• Analysis of above and below-the-line investment of the company for each one of its products, in respect of the competition.
• The current media service, in particular the specifi c responsibilities of the media agency ver-sus the advertising agency.
3.1.2 The pitch in context
This is concerned with describing the general manner in which the pitch is called. For example:
• Initial results of the analysis of the current situation, the nature of possible problems and their causes.
• Internal changes which have led to the questioning of the existing arrangement. • Potential remuneration structure.
• The type of relationship, particularly in contractual terms, that the advertiser wants to put in place.
• Clearly defi ned objectives and the responsibilities that will be conferred upon the media agen-cies; the advertiser will also detail precisely the criteria upon which the agencies will be judged and selected, and second, how it will eventually evaluate the services of its partner agency. 3.1.3 Questions
The third part of the brief will give the advertiser the opportunity to clearly state its requirements and to detail the desired template for the response. For example:
• How is the agency structured? Who will be working on my account? • What fee structure will you propose given the particulars of our brief?
Selecting a
media agency
• What is your experience in terms of consolidating buying across several subsidiaries of the same group?
• Can you prepare a critique of our current media strategy for the past year as well as any plans provided?
The following selection criteria are not exhaustive, but will service as food for thought.
3.2 Selection criteria
These criteria follow two main themes:
• Media agencies: criteria linked to the nature, the specifi cities, etc. of media agencies (via a vis the expectations and the structure of the advertiser).
• The media debate: criteria linked to evaluating the responses to a brief (proposed by the advertiser in the setting of the initial consultation).
On each theme, the advertiser will be able to use the following list as a guideline to construct his own selection check-list and organise it in terms of themes and priorities. It would be useful to submit to the companies approached the key points and their priority, so that each agency will provide the required information, with the same emphasis as the advertiser.
3.2.1 Media agencies
As a general rule, the criteria in this section will allow the advertiser to draw up a shortlist of com-panies that he wishes to approach. These criteria can be based upon his/her own knowledge or even from research documents (see Appendix 2), or indeed from meetings, whether formal or informal, with the companies in question.
Meeting the agencies at this stage of the procedure can sometimes allow the advertiser to sim-plify the selection procedure by:
• Clarifying the brief.
• Identifying a shortcoming of a company that consulting documents alone would not have highlighted.
Structure, scope, environment and image of the media agencies:
• Size
– billings (declared by the agencies, but reported by industry sources), – billings split by media,
– profi t margin, gross and actual. • Shareholding
Selecting a
media agency
• Date the company was founded/established, fi nancial standing, business ownership, media credit recognition status.
• Context
– relationship to any group of agencies, either communication or media specifi c, – independence versus media,
– any sister companies/partners. • Membership of any professional bodies. • Client portfolio
– key clients,
– recent account wins and/or losses,
– any clients competing in the same sector of activity: assurance of confi dentiality and impartiality.
• International credentials
– of the media agency, of its shareholders, its clients, any partners, etc. • Positioning, general recognition and image of the company.
• Perception of advertisers, communications agencies, the media and general goodwill. • Relationship between members of two companies.
Organisation and extent of the service, remuneration:
• General company philosophy and professional approach. • Key words defi ning the company.
• How these are interpreted in the organisation, its procedures, etc. • Operational structure
– commercial structure and profi le of any partners, – internal organisation: specialisation/integration, – defi nition and role of key departments in the company,
– senior contacts and teams who would work for the particular client: experience, persona-lity, particular area of expertise, detailed CVs.
• Scope of service and presence or not of particular functions – studies/research, sponsorship, multi-media, direct marketing.
• List of information banks and tools, name and description (are these tools available to the market as a whole by external suppliers, or are they proprietary studies and tools, developed by the agency?)
– software to aid strategic planning, – software measuring competitive data, – media planning software,
– optimisation software,
– buying administration software.
• Administration and fi nance: management procedures and documentation. • IT: system and equipment, staffi ng, IT links with advertisers and media owners. • Remuneration: format and implementation.
Selecting a
media agency
3.2.2 The media debateObviously, the detailed list for judging the selected agency proposals will largely depend on the content of the advertiser’s brief. Whether it consists of a certain amount of analysis (targeting, entry costs, budget allocation, media-marketing analysis, etc.), media strategy, media plans, cost approach, audience forecasting, etc., certain criteria listed will be more or less relevant, and have more or less importance.
It is generally at this stage that the advertiser will request a detailed proposal on the type of service and remuneration.
Strategic criteria:
• Relevance, creativity and whether proposals are realistic.
• Any alternative proposals and justifi cation for the solution recommended. • Contacts, thinking and approach in
– media planning, – buying,
– optimisation,
– evaluation (quantative and qualitative, etc.).
Financial criteria:
• Negotiation policies (based on expertise and actual case studies). • An actual budgeting exercise.
• Experience and scope for
– consolidating buying (for multi-company/multi-brand clients), – co-ordinaion of negotiations.
• Tools to replicate or aid buying.
Evaluation criteria:
• Use of tools and studies in the planning and effi cient buying of space. • ‘Live’ examples of constructing a plan in order to
– evaluate the capacity for forecasting TV. – evaluate media performance.
– show understanding and best use of tools, guidelines, optimization methods. Or
• Pre-worked analysis of an existing media plan for the advertiser – critique of a recent media plan.
Or
• Pre-worked analysis of a plan for another advertiser of the agency – critique in terms of what the competition are doing.
Selecting a
media agency
Criteria linked to the media agency proposal:
• Scope of service. • Dedicated team.
• Proposed working practices for the advertiser, creative and media agencies. • Remuneration
– remuneration structure (global, by particular service, percentage of business volume – gross or net, all inclusive payment, man-hours basis, etc.),
– if based on incentive: approach (regarding optimisation, negotiation, both, etc.), calcu-lation, methodology, defi nition of parameters to be used, caps to be applied.
• For the majority of these criteria, an actual analysis of the fi gures provided will need to be carried out. It is therefore necessary to be extremely careful when comparing fi gures and results:
– of media performance: all things remaining equal, different tools generally produce dif-ferent results,
– of buying performance: different terminology can lead to confusion,
– of remuneration: costs may be gross of net. In order to avoid confusion, the advertiser can ask pitching agencies for an example of their total remuneration in year one.
Selecting a
media agency
4 UNDERSTANDING THE FINANCIAL PROPOSALS
Since pitches very often put signifi cant emphasis on optimising quantitative performance, it is useful to set out some rules to ensure good understanding and comparison of the fi nancial pro-posals.
4.1 In terms of negotiations
An important point to remember is that, at the pitch stage, the buying rates quoted by non-incumbent agencies can only be non-guaranteed rates. In such cases, it is worth seeking per-formance-related remuneration and linking it to the delivery or exceeding any ‘non-guaranteed rates’. This helps underpin optimum delivery to the advertiser.
They are estimates based on the media agency’s experience and their ability to make assumptions on the different negotiation opportunities based on the advertiser’s budget characteristics. When a pitch concerns buying, it is important that the advertiser communicates to the agency, for the purposes of this exercise, a precise specifi cation of all the parameters that can have an impact on the buying quote. In effect, the less the detail provided, the more the diversity of the responses received will render analysis diffi cult.
Practical clarifi cations
If the question is “I’m spending $7 million gross on TV, what is the net cost?”, the rates quoted by the media agencies may show extremely signifi cant variations. The parameters that have, in-deed, an infl uence on the level of negotiation are many: share, period, placement, space booked in fi xed or run of rate card, etc. The media agencies can take account of each of these in order to improve the discounts provided for in the sales conditions of the sales houses.
For most of the media, discounts can reach high levels; it is therefore appropriate to effectively determine the conditions and constraints that the media agency has worked to in calculating their buying rates.
Whatever the media, in order to easily compare the buying rates quoted by medium, the adver-tiser should fi x in advance, in the pitch brief, his objectives in terms of target audience, period, performances (namely frequency distribution), placement requirements, etc.
• On TV:
– expenditure share by channel, – precise activity periods, – split by daypart, by day, etc., – run of rate card.
Can all contribute to variations in the buying rates quoted. This example illustrates some of the questions to ask.
Selecting a
media agency
The simplest method is to ask the media agencies to supply, in addition to the buying quote, a precise description of the structure of their TV plans and an estimate of their net cost per GRP based on the stated target audience(s). In principle, every media agen-cy should provide with this description a rationale for their TV plan, thus demonstrating that their buying strategy meets the objectives.
• On radio:
– same can be applied as for TV. • In press: two points to take into account
– activity periods, – positioning guarantees. • On outdoor: – activity periods, – formats, – types of network, – geographic coverage.
In addition, the base cost on which the quoted % discount is applied should be specifi ed – on the gross rate card cost or the gross space value (cost inclusive of any preferential positions).
4.2 In terms of remuneration
It is the responsibility of the advertiser to agree with his media agency, taking account of the ser-vices expected and the benefi ts offered, the methods and amounts of remuneration best suited to their future collaboration. This question should be addressed in the pitch.
The media agency remuneration can take the form of:
• A percentage applied to the total space cost, exclusive of VAT:
In this case the base on which the percentage is applied should be agreed, for example, on the net amount after all rebates are deducted (see Appendix 1).
• A fi xed fee:
To agree the overall remuneration amount, the two partners will asses the component share of each task, detailing it as appropriate according to the services provided: media consul-tancy, media strategy, media planning, media buying, etc.
• Performance incentive:
A media agency’s normal task (and thus their basic remuneration) is to obtain the best place-ments at the best price, based on the agreed plan and respecting the rules of competition. To complement the basic remuneration, the advertiser may choose to put in place a perfor-mance-related bonus incentive. In this case, the incentive should:
– be based on criteria which are simple, indisputable and measurable. – meet the clearly-defi ned objectives of the advertiser.
Selecting a
media agency
Comparing the proposals
As a result, it is not always easy to compare the remuneration proposals presented in a pitch. The following points should be checked:
• The basis on which the fee, when expressed as a % of the space cost, is applied (gross, net, gross negotiated, etc.?).
• Detail of the mechanics and ceiling of incentives.
To compare the remuneration quotes, all the proposals should be evaluated on a common basis, be that in $ or as a % on the net space cost. As the same time, where an incentive is proposed, the situation which is most favourable to the media agency should be taken into account. Equally, the total net space cost plus remuneration should be considered, since an advertiser may be willing to pay more to an agency who will deliver better rates.
For example: for a budget of $100 000 million gross
Hypothesis 1 Hypothesis 2
Gross budget Discount
Net space budget
$100 000m – 41% $59 000m $100 000m – 42% $58 000m
% commission 1% / gross = $1 000m 3.5% / net = $2 030m
Performance incentive No = 0 Capped at 0.5% = $290m
Fixed fee $1 200m 0
Total remuneration $2 200m $2 310m
Selecting a
media agency
APPENDIX
APPENDIX 1 – Different budget defi nitions
For information or reminder
Gross including surcharges Rate card prices including surcharges for special positions Gross rate card Rate card prices excluding surcharges
Gross invoiced Rate card prices less free spaces or specifi c agreements (run of rate card, etc.)
Gross negotiated Media cost less any negotiated free space but prior to deduction of agency commission
Net topline Media cost after deduction of all immediate discounts
Net bottom line Media cost after d eduction of all immediate or contingent discounts
APPENDIX 2 – Documentary information sources
• The RECMA (expert reports on media consultancy and buying) have a wide ambition: to inform advertisers of everything related to media agency (weight, evolution, way of working, tools, positioning and services, etc.). These reports are accessible through yearly subscrip-tions.
• The local trade associations.
